A Blueprint for Successful Financial · 2015-12-30 · Personal Financial Statement • Prepare a personal financial statement as of today and as a specific future date: o Prepare

12/30/2015

1

A Blueprint For Successful Financial Planning

JANUARY 19, 2016 || 10:00 –11:00 AM

Presenter(s):

R. David O’Brien || Weber O’Brien, Ltd., Toledo, OH

James F. Weber || Weber O’Brien, Ltd., Toledo, OH

Session Description

Are you at a fork in the road and don't know which way to turn?

Perhaps it is because you've spent more time working 'in' your

business rather than working 'on' your business? In this session, we

will discuss smart planning opportunities that you should consider as

your business becomes more profitable. We will take a closer look at

a variety of planning tools such as financial, insurance, retirement,

real estate, and estate and succession planning options - all with the

goal to get you where you want to go.

12/30/2015

2

Learning Outcomes

Learn about business planning, operations, banking and general financial performance information that will make your business stronger.

Learn about legal planning, wills, trusts, matters of corporate governance and indemnification to assist you in protecting the assets you have accumulated.

Learn about retirement planning, savings, life and disability insurance, as well as related new and innovative products on the market and their use.

Index

General

Personal FinancialStatement

Advisors

Retirement Plans

Insurance

Benefits

Business Plans

Budgets

Cash Flow

Succession Planning

Estate Planning

General

12/30/2015

3

General• Do you have any idea of how much money you will need

to retire and earn $10,000 a month from the date you retire to that bad day

• Do you have any idea of the annual cost of the benefits you receive out of your company

• Do you have any idea of what your company is really worth

• Do you have exceptionally strong key employees who can run the company with or without you and perhaps better than you…

General

• Do you have exceptionally strong advisors who tell you the truth and not just what you want to hear

• Do you have competent financial staff…remember the game is financial

• Do you have written formal personal and business plans and goals

• Do you have all risk properly evaluated and minimized through the use of insurance and or legal documents

Personal Financial Statement

“How do you know how to get to were you want to go if you don’t know where you are”

12/30/2015

4


• Prepare a personal financial statement as of today and as a specific future date:

o Prepare this annuallyo 10 years from now oro At your retirement age

• Don’t prepare this like you prepare a bank personal financial statement.

• Use correct amounts, do not overstate assets, values or understate liabilities

• Do not include inheritance


• Use the net book value of the business as the business fair market value.

• Compute investment return at 4% annually.

• Compute deferred tax at 30% of the estimated business value and retirement plan value.

• Record personal possessions at a very small value unless you collect something of value


• The top three basic things you should do to best help you achieve your goals:

o Save something each month.

o Make the maximum contribution to your retirement plan annually.

o Pay off all existing mortgage debt before retirement.

12/30/2015

5


• Does the conservative future value of your liquid assets, net of taxes and inflation adjustments, support your lifestyle from retirement age to the estimated date of death (estimated at age 90)?

• Planning Note

o You will need approximately $1,849,000 of net (after tax) invested cash to receive $10,000 a month, for 24 years at a 4% rate of return.

SamplePersonal Financial StatementAssets Today Additions Estimated

Amount in 10 Years

Cash and Investments $400,000 $100,000 $1,000,000

Residence $400,000 $400,000

Commercial Real Estate $600,000 $600,000

Business $600,000 $600,000

Retirement Plan $700,000 $500,000 $2,000,000

Personal Possessions $10,000 $10,000

Total Assets $2,710,000 $4,610,000

SamplePersonal Financial StatementLiabilities Today Additions 10 Years From

Now

Bills $10,000 $10,000

Mortgage Residence $90,000 ($90,000) ‐0‐

Mortgage Commercial $200,000 ($200,000) ‐0‐

Deferred Tax $400,000 $800,000

Total Liabilities $700,000 $810,000

Net Worth $2,010,000 $3,800,000

Total Liabilities and NetWorth

$2,710,000 $4,610,000

12/30/2015

6


• Personal Budget• From your captured net worth

• Subtract the value of your residence

• You can’t count your house if the amount is $2,000,000 – it will appear like you should have $10,000/month plus Social Security, commercial rents and business buy out

o Don’t forget the effect of inflation, taxes and value of the benefits paid by the company

Advisors

AdvisorsOften the most important part of successful planning is your choice of professional advisors

The selection of an advisor should be based on there ability, area of specialization, references and recommendations - not necessarily family friendship longevity or price

12/30/2015

7

Advisors

Attorney

• Specializationo Commercial, Litigation, Estate, Real

Estate• Proactive • Experienced

Advisors

CPA• Specialization• Proactive

• Experienced

Advisors

Insurance• Risk Assessment/Review• Prepare Summaries Annually• Product or Results Oriented

12/30/2015

8

Advisors

Financial Advisor• Planning• Portfolio Return • Products/Results

Getting Started

Getting Started

Prepare a monthly/annual budget cash(receipts and cash disbursements).

12/30/2015

9

Getting Started

• In your budget, list all sources of income:o Wageso Consulting Feeso Social Security o Interest

• Do not include inheritance.

• Will these sources of income continue when you become financially independent?

o Dividendso Real Estate Investmentso Other

Getting Started

• Auto• Insurance• Medical• Mortgage• Credit cards• Utilities• Gifts• Groceries• Vacation

• Gifts• Cell phones• Security• Maintenance/repairs• Retirement• Savings• Children• Health• Professional Advisors

List all expenses:

Make sure to include those expenses paid by the company that you will need to pay in retirement. Share all information with your spouse

Getting Started

• When the budget is complete and makes sense…

o Set up a collective meeting with your:

CPA

Investment Advisor

Estate Attorney

Insurance Agent

o Review your budget with them, does it make sense to them

12/30/2015

10

Getting Started

Set up continuous meetings with your advisors until the following is complete:

• A financial plan• An estate plan• An insurance plan• A retirement plan• An investment plan• A succession plan

Retirement Plans

Retirement Plans

• Retirement plan contributions allow you to accumulate tax deductible and tax deferred assets o Design the plan – 401K, Safe Harbor, profit

sharing, cash balanceo Invest in the plano Review your investment strategy on a regular

basiso Monitor plan costso Remember you have a fiduciary responsibilityo Make sure an annual 5500 is filed

12/30/2015

11

Retirement Plans

• Common retirement plans:o IRA’s

o Deductibleo Non-deductible - ROTH

o SEPo 401K plano Profit Sharing Plano Defined Benefit Plano Defined Contribution Plan – Cash Balance

• Benefits of qualified retirement plans:o Assets grow tax deferred.o Typically not subject to the claims of creditors.

Retirement Plans2016 Limits by Plan Type

Life Insurance

12/30/2015

12

Life Insurance

• Life Insurance Coverageo How much is enough?o Does your death benefit allow your family to live in the

lifestyle that they are currently accustomed?

• Who is the beneficiary?o Spouseo Trusto Companyo Children (ILIT)o Bank (by assignment, pledge, or guarantee)

Life Insurance

Life insurance considerations:

o How much is enough

o Who is the policy owner

o Who is the beneficiary

o What type of insurance term/whole life

o Corporate or personal

o Annual premium

o Insurance term (10 years, 20 years, lifetime)

o Product conversion opportunities (term to whole life)

o Cash Value

Life Insurance

Life insurance considerations:

o Like any other advisor, you should meet with your insurance advisor annually

o Life insurance needs can change rapidly

o New products may emerge

o Costs may be decreasing or increasing

12/30/2015

13

Life Insurance

Life insurance considerations:• Does the policy build cash value?• Have you borrowed against the cash value?• Has your agent reviewed with you an in-force ledger on

mature policies?

Types of Life Insurance:• Whole Life• Universal Life• Term Life

Level Term Convertible Term

Life InsuranceIrrevocable Life Insurance Trust (“ILIT”)

• Use of an ILIT may be appropriate to avoid life insurance being included in your estate when determining if estate taxes are due.

• An ILIT removes incident of ownership by moving ownership from the individual to the trust.

• Beneficiaries must be advised annually of their withdrawal rights. (CRUMMY Notice)

• Contact your insurance advisor to see if an ILIT is right for your situation.

• Annual reporting

Disability Insurance

12/30/2015

14


• Studies have shown that one in three employees will become disabled for 90 days or more before age 65.

• One in seven employees will be disabled for five years or more before retirement.

Disability InsuranceDefinition

• Disability insurance is a policy that replaces a stated percentage of an individual’s income in the event of disability.

• Elimination period or waiting period is typically between 60 and 90 days.

• Policies typically pay out between 60-70% of the income, if disabled.

• Be careful as to how the policy defines disability and work.

• Taxable vs. non-taxable benefit.


Key Considerations on Disability Insurance

• Benefit amount – is it reasonable?• Benefit conditions – define work• Benefit term• Premiums deducted or not deducted for tax

purposes• Benefits taxable or not taxable

12/30/2015

15

Long Term Care Insurance

Long Term Care Insurance

• Provides for the payment of assisted living, caregiver and nursing home costs

• Use of alternative life insurance products

• Deductibility (C Corp/S Corp)

• Return of premium provisions

• Inflation adjustments

• 5 pay options

Umbrella Insurance

12/30/2015

16

Umbrella Insurance

• A general policy to provide insurance coverage beyond normal existing policy limits.

• Also consider formal corporate indemnification.

Benefit Planning

Benefit Planning

• What are the benefits that you currently receive from your company?• Are you taking advantage of all taxable/non-taxable benefits

available? • Will you receive these benefits when you retire and what will be the

cost to you to maintain these benefits in retirement?

o Medical Insurance

o Life Insurance

o Disability Insurance

o Long Term Care Insurance

o Retirement Plans

• Are these benefits discriminatory

• Is a portion of the benefit taxable-auto

12/30/2015

17

Benefit Planning

Auto

• Maintenance and repairs

• Lease

• Fuel

• Insurance

Benefit Planning• Deferred compensation

• Related party real estate

• Family at work

• Travel

• Entertainment

• Legal

• Accounting

• Other - You know what they are?

• Do you own non-controlled companies < 50%

o Do you own a C Corp to utilize

o Lower tax rates to fund

o Non-deductible benefits

Other Planning Items

Divorce

• Prenuptial Agreements

Children

• Gifts

• Stock in company (gifts/bonus/sale option)

• Marital assets

• Prenuptial agreements

• Fairness in estate, company stock vs other assets

• In-Laws

12/30/2015

18


Alternative Investments

• Annuities

• Life Insurance products


Risk Review• Commercial• Indemnification• Auto• Employee Practices Liability Insurance• Data Breech• Cyber Insurance• Umbrella• Captive Insurance • Other

Have your agent prepare a summary annually

Business Financial Planning

12/30/2015

19


In order to have a successful business, every company needs to establish a road map for success.

The following items need to be implemented:

• Organizational chart

o Be sure to delegate responsibility, authority and accountability.

o You, the owner, are the biggest violator of the organizational chart!

o The organizational chart is a tool to help you stop micro-managing.

Business Financial Planning• Business Plan

o An annual business plan must be prepared.

Review the prior year plan.

Make necessary changes.

Get employee input.

Use it as a business tool.

Set a goal. If you achieve the goal, reward those who helped you obtain the goal!

Business Financial Planning• Budget

o Prepare an annual budget for: Sales Cost of Sales Overhead

o Assumptions

o Revise as needed

o Monthly review

Budget versus actual (explain all significant variances)

o Year to Date

Budget vs Actual

Explain all significant variances

12/30/2015

20


• Create and Maintain a Strong Balance Sheet

o Set goals

Current ratio

Debt to equity

Pay down of debt

Systematic increase in retained earnings

Example: The company will increase retained earnings annually by 1.5% of sales, net of distributions.

Business Financial Planning• Systems

o Document your systems

o Establish formal standards, practices and polices

o Review with employees

o Systems sell companies

• Branding

o Who are you?

o What is your product?

o How are you different?

o Know what you are not good at!

o Specialization


Create financial independence outside of your business.

• Your business should not be a majority of your personal worth.

• Build a strong personal net worth outside of your business.

o Non-liquid

o Liquid

o Real estate, investments, retirement plans, other

12/30/2015

21


Succession Planning

• Only about 1 in 3 closely held businesses pass successfully to the next generation.

• Minimum plan requirements:

o Transfer control according to your wishes.

o Carry out the transfer in an orderly fashion.

o Minimize the tax liability on the transfer.

o Provide economic opportunity for family.

Business Financial PlanningOptions:

• Gift stock (sell stock) to family members

• Sale of stock to a key employee

• Sale to competitor

• Run to the end…liquidation

Does the owner really intend to retire? When?

• What is the company’s fair market value?

o Has a appraisal been preformed

o What is the industry fair market value model

o Trailing liability

Exit Strategies

12/30/2015

22

Exit Strategies

What is your exit strategy?

• None

• Work until you die.

• Sell to a family member.

• Sell to a key employee or employees. (ESOP)

• Sell to a competitor.

• Close down- liquidate.

• Merger

Exit Strategies

Sell to family member

• Is the family member qualified?

• Effect on key employees?

• Will they pay fair market value?

• Are they bankable and bondable?

• Will they respect non – family management team?

• Estate planning issues?

• Family issues between children and in-laws?

Exit Strategies

Sell to key employee

o Is key employee qualified?

o Do they have cash? Are they bankable, bondable?

o Effect on family members in the business?

o Effect on customers?

o Effect on other employees?

12/30/2015

23

Exit Strategies

Sell to key employee

• Deferred compensation planning opportunity.

• Are they working with advisors?

• Are they ready?

• Are they leaders, managers?

• Are they involved in sales, estimating, project management?

Exit Strategies

Sell to Competitor

• Effect in marketplace?

• Effect on employee morale?

• Blending of company cultures.

Exit Strategies

If you plan on exiting the business ….

• Are you going to work part-time?

• Are you going to completely exit the Company?

• How many years before you retire?

o Has it been 10 years from now, for the last 10 years?

o Are you ready now?

o Will you be ready in 5 to 10 years?

12/30/2015

24

Exit Strategies

• Do you have a successor or succession team in place?

• Are you letting go (giving up control) to the next generation?

• Are you allowing the Company to survive without you?

• Have you hired an experienced transition advisor?

• Have you hired an independent consultant to evaluate your children or key employees?

Exit Strategies

• Are you placing the selling price at fair market value or is it based on the income you need at retirement?

• What is Fair Market Value?

• What benefits do you expect when you exit the business?

• Taxes are an important consideration

Succession Planning

12/30/2015

25

Succession Planning

• Attorney

• Accountant

• Financial Planner

• Investment Advisor

• Insurance Agent

• Banker

• Bonding Company

• Business Broker

• Psychologist

The following professionals should be part of the succession team:

Succession Planning

• Have these advisors met with you to discuss the process?

• Have you already started?

• Are they the right advisors to take you through this process?

• Do they tell you what you want to hear or do they tell you what you need to hear?

Succession Planning

Effective succession planning should include the following:

o Current owner transition.

o Personal and corporate direction for the future.

o Former owner to becoming mentor, teacher, door opener.

o Former owner must have financial resources independent of the business.

12/30/2015

26

Succession Planning

Family transition

• Family harmony.

• Personal well-being.

• Confront emotional issues.

Succession Planning

Business transition

• Embrace change.

• Strong management team.

• Exiting owner (family) must abide by rules implemented by new management team.

Succession Planning

Management transition

• Family member.

• Non-family member.

• The organization must know who the new management team is.

• Conflict resolution, process, accountability.

12/30/2015

27

Succession PlanningOwnership transition

Who is the new owner?

• The ownership transfer plan should be:

o Tax effective.

o Reflective to needs of the business.

o More “management driven” than tax driven.

o Concerned with third party interest (bank/bonding).

o Concerned with cash flow.

Succession PlanningEstate transition

• Equalize estate for family members who have no business ownership.

• Ensure fairness in business.

• Develop exit strategy for family members who do not participate in ownership of business.

o Option to buy out stock interest in business and real estate interest.

Succession Planning

Is there more than one (1) owner?

Buy-Sell Agreement:

• Allows corporation or remaining stockholders to purchase stock.

• Value for stock (valuation, formula, stated value).

• Funded on death with life insurance.

• Disability

12/30/2015

28

Succession Planning

Methods

Stock redemption• Remaining stockholders purchase stock on

death, disability or retirement (outside).• Corporation purchases stock (inside).

Sale to outsiders

Asset sale

• Stock sale

Other - ESOP (Group sale to employees)

Succession PlanningFunding

Life insurance

• Corporation pays premiums on life insurance

o If stockholders are beneficiary, premiums deductible by corporation and reported as income to stockholder beneficiary (cross purchase).

o If corporation is beneficiary, stockholders pick up no income and corporation gets no deduction for premiums paid.

o Remember registration for key man Life Insurance under section 101(J)-2.

Succession Planning

Benefits of this method

• Provides liquidity to estate and business.

• Smooth transition between business and family.

12/30/2015

29

Succession PlanningDrawbacks

• Funded with life insurance

o Insurance may be difficult to acquire and expensive with age or health issues.

• Business transferred upon death

• Do you have a current buy-sell agreement? o Is the value reasonable? o How was value determined? o Has value been recently updated?

Succession Planning

ESOP

• Employer stock ownership plan.

• ESOP can accumulate cash to acquire or redeem stock of retiring business owner.

• Qualified plan that enables employees to invest primarily in their employer’s stock.

o Corporation can deduct cash contributions and dividend payments to ESOP.

o Proceeds to seller may defer tax.

Succession Planning

Disadvantages

• Control issues if employees acquire enough stock and change corporate policy.

• High administrative costs.

• Must use specialist.

12/30/2015

30

Succession Planning

Gift stock to family members

• Gift $14,000 in 2015 to family members without incurring gift tax

• Lifetime gift in 2015 - $5,430,000

Succession Planning

Allows business owner to transfer business to next generation tax free during his/her life.

• Reduces owner’s taxable estate.

May create an income tax advantage.

• Shifting income to lower bracket taxpayers.

Succession Planning

Disadvantages

• $14,000/year is not much

• Owner giving up income -o Dividendso Pass through basiso Can the owner take deferred compensation,

benefits?

• Owner may not be ready to give up control.

• Can all children really run the Company?

• Will their goals be aligned?

12/30/2015

31

Succession PlanningSale to key employee

• Do they have capital?

• Will the owner fund a portion of the selling price?

• Can the key employee get financing?

• What do they have at risk?

• Will the Company have positive cash flow with the financing in place?

• Use of a deferred compensation plan to begin the process.

Succession Planning

Sale to competitor

• May be simplest succession plan.

• If no family member or key employee can acquire business, may be best option.

• May provide highest value for owner.

• May provide quickest liquidity for owner.

Merger - Interesting option

Liquidation - Really

Succession Planning

What is the company’s fair market value?

• Has a business valuation been done?

• Cost of a valuation?

Common valuation concepts in buy-sell documents:• Appraisal• Formula• Stated amount

In practice, net book value seems to prevail for contractors.

12/30/2015

32

Succession Planning

• Do you have related companies? Rental real estate, equipment leasing companies, other.

• Do you have restatements or adjustments to income to reflect extraordinary, unusual or unnecessary expenses i.e., excess compensation, benefits, rents, other?

Succession Planning

• How does your industry model value the company?

• Complete a stress test on your value.

• Remember no value is relevant if the company’s historical average or current earnings can’t cover the debt service necessary to amortize the debt over an amortization period of 5 to 7 years after tax.

Succession Planning

Buy-Sell Agreement

• Does a buy-sell agreement exist?

• Are the buy-sell agreements fully signed and executed by all parties?

• Is this reviewed annually?

• Is there a formula (appraisal, formula, stated amount) in the buy-sell that explains how the sale price is calculated?

• Are the buy-sell agreements to be funded by life insurance?

• Is the value reasonable?

12/30/2015

33

Succession Planning

Retirement• Deferred compensation• Sale/redemption cash flow• Rental income

Is the value different for each event:• Life (retirement) • Death• Disability

Family Business Planning


• Family members should be aware of and understand business dynamics and all issues related to the hiring of family members.

o Non-performing family members can be destructive to even the best companies.

• Openly and objectively discuss family matters at corporate meetings.

12/30/2015

34


Allow your child to perform work during high school and college.

• Pay a reasonable wage.

• Require your children to report to a person other than yourself:

Give that person authority and appropriate control over your child.

Make sure the person selected to perform this task is fair.


• Clearly identify your child’s job description and performance expectations.

• Do not pay your child more than others at the same position.

• Place your child in an appropriate position with duties and authorities appropriate for their knowledge and level of experience.

Family Business Planning• Make sure your child’s supervisor has the

appropriate authority and control over the child.

o Assign a non-family member to your child.

• Evaluate your child regularly.

12/30/2015

35


Create a corporate culture of performance.

• Work ethic - pay for performance!

• Establish a form of governance to create a direction for the benefit of the individual, the family, and the Company as a whole.

• Create objective measures.

• Remember, you cannot change what you cannot measure!


• Create policies to maintain civility.

• Create a performance-based reward system.

• Create policies of respect.


Discuss family business issues:

• Profitability

• Liquidity

• Capital resources

• Survival plan

• Succession plan

• Strategic direction

Family owners must be stewards for the next generation.

12/30/2015

36


Create performance incentives to maximize peak performance.

• Employees

• Family members

Form a compensation committee removed from the family.

• Compensating must be based on performance


• Family should always respect non-family management team and provide reasonable access and high standard of professionalism.

• No nepotism

o Children must work outside of company for a period of at least three (3) years.

• Create job descriptions with clear expectations.


Remuneration Issues

Family members who work inside the company

• Salary

• Bonus

• Rents

• Benefits

• Dividends

• Stock

12/30/2015

37


Family members who do not work inside the company:

o Director fees

o Dividends/Distributions

o Rents

o Other

There is usually a struggle between working and non-working family members over the use of available cash flow.


Working family members tend to retain cash flow to:• Expand business• Acquire fixed assets• Acquire other businesses• Pay bonuses to key employees• Pay own debt• Increase working capital

Non-working family members tend to:• Distribute all of the cash they can for personal

use.


Other issues:

• Must choose a proven leader, whether a family member or non-family member.

• Family members must be twice as good as non-family member, to be accepted.

• Cannot lead by committee.

• There must be a person who has authority to make certain decisions for the Company.

12/30/2015

38


Estate planning issues:

Issues for parents-

• Fairness - How do they split up estate between working family members and non-working family members?

o Annual business valuationo A realistic value of the Company must be

establishedo Working family members may get stock in family

businesso Non-working family members may get all other

parental assetso Should non-working family members get stock


This could lead to problems!

o Each party may think they did not get their fair share.

• What happens if a working family member sells company within a short period of time for a large windfall?

• What happens if the Company fails and the working family member loses everything?


• The parents must have in place, today, a plan that allows them the flexibility to transfer ownership to qualified children at a later date.

• If the parents do not create a personal plan today, outside of the business, they will place too great of value on the business to support them in retirement.

• Advisors must create a plan today to fund personal retirement assets beyond the business.

12/30/2015

39

Estate Planning

Estate Planning

General• Taxes can absorb much of the estate without a proper

plan.• State estate taxes also need to be considered.

Gifting to family members• Unlimited gifts to spouse (unless spouse is a

nonresident alien).• Can gift $14,000 in 2015.• Can gift $28,000 in 2015, per year of present interests

if spouse gifts also or agrees to gift splitting.

Estate Planning

Gifting Benefits

• Appreciation on the gift escapes estate tax.

• No gift tax is ever paid on the gift as long as it does not exceed the exclusion ($14,000/$28,000) in 2015.

• This gift reduces your taxable estate.

• Gifts are usually transferred to taxpayers in a lower tax bracket.

12/30/2015

40

Estate Planning

Business/Succession Planning

• Estate tax installment option.

• Allows your estate to pay over a period of up to 14 years on the portion of your estate tax attributable to your closely held business.

• Low interest rates apply during this period.

• Other special rules apply also.

Estate Planning

GIFT AND ESTATE TAX EXEMPTIONS

Unified Credit

• Allows $5,430,000 in tax free transfers during lifetime.

• Reduces amount that can be transferred tax free at death.

Estate Planning

Year Estate Tax Gift Tax

2015 $5,430,000 $5,430,000

12/30/2015

41

Estate Planning

The following represents a very brief overview of themost commonly used documents to prepare a completeestate plan:

A Will• Purpose: States how you want your assets

distributed.

Health Care Directive• Purpose: States who will have control over

health care decisions should you become incapacitated.

Estate PlanningPower of Attorney

• Purpose: States who will have control over finances should you become incapacitated.

A Living Will

• Purpose: States specific instructions on your wishes for life prolonging procedures.

A Living Trust

• Purpose: Explains exactly how you want your assets managed and distributed.

Do Not Resuscitate (DNR) Order• Purpose: Legal form signed by both you and your doctor,

that gives hospital staff permission to carry out your wishes.

Estate Planning

Irrevocable Trust• Purpose: Holds lifetime gifts to the benefit of a

person or persons on death. Amounts are not included in the decedent’s estate.

Credit Shelter or Bypass Trust• Purpose: Created at death to hold and manage

assets for your heirs in an amount equal to the estate tax exemption.

12/30/2015

42

Estate Planning

Insurance Trust• Purpose: The trust owns life insurance policies on

your life and can be used to manage and distribute policy proceeds in accordance with your wishes.

Qualified Terminable Interest Property (“QTIP”) Trust• Purpose: Created at death for the benefit of your

spouse and children. Pays all trust income to your spouse for life. Remainder then passes to your children.

Estate Planning

• Another very important consideration is the selection of the Executor or Trustee:o Familyo Banko Lawyer

• Your estate is a very important and significant asset. It is the final phase of your financial plan (accumulation, preservation, and distribution).

• Make sure you meet with a competent attorney and your financial advisor to implement a plan in accordance with your wishes.

Estate Planning

• Prepare a summary of all documents. o Give a copy to a trusted advisor and place one

in a safe deposit box.

• Review your plan annually with your estate attorney.o CPA and key advisors

12/30/2015

43

Appendix

• Your Personal Financial Statement

Questions?

Speaker Contacts:

James F. Weber, CPAManaging MemberWeber O’Brien, Ltd.

[email protected] (419) 885-8338 ext. 224

R. David O’Brien, CPAMember & Director of Construction TeamWeber O’Brien, Ltd.

[email protected](419) 885-8338 ext. 202

Documents

A Blueprint for Successful Financial · 2015-12-30 · Personal Financial Statement • Prepare a personal financial statement as of today and as a specific future date: o Prepare